(a) General. CMS temporarily may exempt a State from the requirement to implement §§ 435.550 through 435.559 and 435.561 through 435.563 in accordance with § 435.559 if—

(1) A State submits a request that includes information on all of the criteria specified in paragraph (b) of this section; and

(2) CMS determines that, based on the information submitted, the State is demonstrating a good faith effort to comply with the implementing the requirements of §§ 435.550 through 435.559 and 435.561 through 435.563.

(b) Criteria for good faith effort determination. CMS will consider the following criteria when determining whether a State is demonstrating a good faith effort:

(1) Any actions taken by the State toward implementing the community engagement requirement;

(2) Any significant barriers to or challenges in meeting such requirements, including those related to funding, design, development, procurement, or installation of necessary systems or resources;

(3) The State's detailed plan and timeline and milestones for fully implementing the community engagements requirement; and

(4) Any exigent circumstances, such as an administrative or other emergency beyond the agency's control, impacting the State's ability to implement the community engagement requirement consistent with § 435.559.

(c) Duration of exemption. An exemption granted under paragraph (a) of this section shall expire no later than December 31, 2028, and may not be renewed beyond such date.

(1) CMS will approve initial good faith effort exemptions for a period not to exceed 6 months.

(2) CMS may grant one or more extensions of an exemption if the State continues to demonstrate a good faith effort toward full implementation of §§ 435.550 through 435.559 and 435.561 through 435.563.

(3) The length of any extension granted under paragraph (c)(2) of this section shall be determined by CMS based on its assessment of the State's progress and review of an updated implementation timeline and additional information submitted by the State in accordance with paragraph (d) of this section.

(4) CMS may terminate an exemption granted under paragraph (a) of this section prior to the expiration date of such exemption, if CMS determines that the State has—

(i) Failed to comply with the reporting requirements described in paragraph (d) of this section; or

(ii) Based on the information provided pursuant to paragraph (d) of this section, failed to make a continued good faith effort toward implementing §§ 435.550 through 435.559 and 435.561 through 435.563.

(d) Reporting requirements. A State granted an exemption under paragraph (a) of this section must submit to CMS—

(1) A quarterly report on the State's status in achieving the milestones toward fully implementing §§ 435.550 through 435.562 and 435.564 through 435.563; and

(2) Information on specific risks or newly identified barriers or challenges to fully implementing the community engagement requirement, including the State's plan to mitigate such risks, barriers, or challenges and any additional details as requested in a form and cadence as specified by CMS.